LMIRT Management, the manager of Lippo Malls Indonesia Retail Trust (LMIR Trust), is mulling over whether to exercise a put option in relation to Lippo Mall Kemang in South Jakarta after a delay in the issuance of the strata-title certificates.
It is also considering an extension of the long stop date of the put option.
The mall was acquired in December 2014, after unitholders passed a resolution to approve the acquisition in November last year.
As LMIR Trust acquired Lippo Mall Kemang before the strata-title certificates for the mall were issued, the vendor of the mall, PT Almaron Perkasa (PT AP), on Sept 14, 2014, entered into a put option agreement. PT AP is owned by PT Lippo Karawaci - the sponsor of LMIR Trust - and a subsidiary of the sponsor, PT Wisma Jatim Propertindo (PT WJP), among others.
Under the agreement, if the certifictes are not issued in the name of PT Kemang Mall Terpadu (IndoCo) - an indirect wholly owned subsidiary of LMIR Trust - within 12 months from the sales and purchase agreement, the trustee will have the put option to require PT WJP and/or other entities appointed by PT WJP to purchase the entire equity of IndoCo.
The purchase price for IndiCo is set at the higher of 3.6 trillion rupiah (S$352.7 million) and the market value of the strata title units of Lippo Mall Kemang as determined by two independent valuers. This will be after adjusting for other net assets and liabilities of IndoCo and all transaction costs incurred by LMIR in acquiring the strata title units and exercising the put option.
The purchase consideration payable by PT WJP shall be offset by net income generated from the strata-title units of Lippo Mall Kemang from the date of the mall acquisition till the put option is fully exercised.
PT AP and PT WJP have highlighted that there was a delay in the approval process for the application for the strata-title certificates of the mall.
While the application for the certificates was submitted in December 2014, there was a significant restructuring in the Building Supervision Agency (BSA) which processes the application in January this year. As such, the newly appointed team from the BSA had to revisit the site and conduct a fresh review of the application. The review was completed only in June, and a fresh application for the certificates was submitted on June 4.
"The manager views the delay in the issuance of the strata title certificates as a technical defect and wishes to state, for the avoidance of doubt, that in the meantime, LMIRT continues to control, own and operate Lippo Mall Kemang, which continues to function and generate income for LMIR Trust," it said in a release to Singapore Exchange on Tuesday.
Unitholders will be updated once a decision is made. The last day for the exercise of the put option is Dec 14, 2015.